Month at the Races

September added over $6,000,000,000 to the value of New York Stock Exchange securities. But last week, stock prices marked time, the Dow-Jones average of 30 industrial leaders fiddled & fussed between the September 12 high of $155.92 and $150 (August 31: $134.41). September's stock buyers wanted to know if they had got ahead of the business procession, if so, how far. One reason why $87.50 seemed a more logical price than $100 for War Baby No. i Bethlehem Steel, was this kind of calculation: the very lowest estimate of September's gift to U. S. warehouses runs at something like $1,000,000,000 of unconsumed production. Meanwhile, standard domestic consumption indices (like department store sales) are doing no booming at all. Even Montgomery Ward and Sears, Roebuck have suddenly lost their 1938-39 oomph. Only a real export boom seemed likely to save the U. S. from some pretty drastic inventory trouble.

Alternately the market went to pieces on headlines about 1) peace, and 2) Congressional embargoes remaining in force; went through the roof on headlines about i) long war, and 2) Congressional repeal of the arms embargo. But the net result of all this switching back & forth between war & peace got the market nowhere. One favorite pastime was restless switching from one fancied war baby to another: Wall Street Journal's, Broad Street Gossip Column noted that Sept. 26 one broker got 60% of his commissions from switches, that one customer had switched 15 times in the last two weeks without getting anywhere.

Nor was any money going into World War I's favorite commodities. Earlier in the month knowing speculators in copper had been stung by the price being pegged at 12-c- a Ib. (1918 high 26-c-). Europe was showing no signs of needing U. S. copper. Another World War II flop was wheat, which boomed to 92-c- first week of September, ended the month at 87-c- (1918 high: $2.25). Reason: for the week ended Sept. 23, U. S. grain exports totaled 366,000 bushels against 2,779,000 bushels in the same week of 1938. One commodity which had previously got somewhere for some specs was sugar. But this exploded too when Secretary of Agriculture Wallace took the lid off all marketing restrictions.

One place where money was going was into such ordinarily dead issues as coal stocks, which nothing short of a World War could volatilize. This World War, by pushing Germany and England out of the world coal market, was bringing U. S. coal companies some pretty fair export business. In addition, if anybody stood to profit momentarily from industrial forward buying, they did: they couldn't fill their orders. Pittsburgh Coal was traded at $8 1/2 (up almost 300% from $2 1/4), Consolidation Coal at $6 3/4 (up over 500% from $1 3/4).

Another favorite stunt was buying behind the inventory boom: buying pipe-line companies which haven't yet reflected profits from increased oil production; buying chemical stocks like Union Carbide, Air Reduction and Allied Chemical in order to cash in on the inventory boom in the steel and textile industries these companies supply; buying rail equipment companies like Pressed Steel Car, American Car & Foundry, Colorado Fuel and Iron which seem sure to get the profit booming carloadings should be bringing the unprepared U. S. railroads.

Another type of bargain-hunting centred about movie companies which sold off on the outbreak of war because they depend on belligerents for as high as 40% of their gross from pictures. Last week, shrewd buying was anticipating new strength in movies on an offsetting increase in U. S. moviehouse attendance of 5%.

Win, lose or draw, one place no one wanted to put money was in investments for income. American Tel. & Tel., which had paced the market earlier in 1939 (high $170 1/8) when people wanted the $9 it pays per share, without realizing it wasn't earning $9 a share, lazed at $161 7/8 (Aug. 31 close: $160 7/8); yet it is now earning at the rate of $9 for the first time in two years.

Payoff on Month I of World War II: some plunged in Beth Steel at $go-to-$100, hedged by picking up German Government dollar bonds (which went unnoticed from $5 to $9) on chances that they might go to $25 (netting 400%) if Hitler should happen to get his peace.

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